Who must pay the Municipal Capital Gain Tax? The buyer or the seller?

Many clients come to the Pérez Parras Economists and Lawyers office asking us about the validity of the clause incorporated in the sale contract that obligates the buyer to pay the municipal capital gain tax.

Other clients, interested in selling their home, ask us if they can incorporate the aforementioned clause into the sale contract and be released from the obligation to pay this tax.

Analysis:

In which cases is the clause of the sales contract valid, establishing that the buyer must bear the municipal capital gains tax, IIVTNU?

This clause can be incorporated into the sale contract under article 1255 of the Civil Code.

Thus, the parties to the contract must agree that one of them assumes the tax obligation that, according to tax regulations, corresponds to the other party.

Can this clause be considered abusive?

The seller:

The first thing we want to make clear, to avoid confusion, is that:

In the case of assets transfers against payment, for example in the sale of a home, the taxable person or person obliged to pay the Municipal capital gain tax will be:

  • the transferor, that is, the seller of the home.

Therefore, the City Council will always require payment from the seller, regardless of what has been stipulated in the sale contract.

The buyer:

With this in mind, normally, the clause stating that the buyer must pay the capital gain is considered valid whenever the sale is between individuals and it is an individually negotiated clause.

Now, if the buyer, despite what was agreed, did not comply with the payment of the tax:

  • the competent city council may claim payment from the seller,
  • who will have to pay it,
  • without prejudice to the seller’s timely legal claim against the buyer for breach of contract.

An entrepreneur or society:

Nevertheless, the clause may be considered abusive in court:

  • if the sale takes place between an entrepreneur or company engaged in real estate development and a consumer,
  • if the clause of the contract passes on the buyer the obligation to pay the capital gain,

In this case, the persons participating in the legal transaction would not be on equal terms; and a significant imbalance could be produced to the detriment of the consumer.

Consequently, if the clause is declared abusive and the buyer has already paid the capital gain:

  • the seller must refund the buyer the amount that he has paid to the city council.

The Pérez Parras Economists & Lawyers Firm in Málaga and Nerja encourage consumers who were imposed the payment of the Municipal capital gain through a clause in the sale contract, to make legal claims to defend their interests.

Finally, we always suggest to our clients interested in acquiring or selling a home, that they request personalised professional advice. Therefore, if you are in this situation and would like us to help you, do contact our experts of Economists & Lawyers in Malaga and Nerja  and we will study your case most carefully.